US election drives record bitcoin betting

The number of bitcoin bets made on the US presidential election has grown dramatically. “People were very passionate about betting during the US presidential election season,” a spokesperson for the BitBet website told BNC, “and were also very passionate during the whole Brexit affair.” Another betting site, Fairlay, told BNC that a single political bet attracted 4,356 predictions worth about $956,000 at current bitcoin exchange prices.

Bitcoin was in its’ infancy during the 2012 presidential election, when the first platform for bitcoin betting was created. In April 2012 ShapeShift CEO Erik Voorhees launched SatoshiDice. The simple online dice game allowed anyone to bet small amounts of bitcoin on the outcome of a dice roll, using a system that was provably fair.

The anti scam feature is specific to cryptocurrency, and cryptographically proves that the wagering process is not being fudged by the site administrator, nor anyone else. In spite of the small sites questionable legal standing, it was responsible for half of all bitcoin transactions in June 2013. Voorhees sold SatoshiDice in July 2013 for 126,315 bitcoins, worth well over US$10 million at the time.

Not only is the cryptocurrency useful to players, but incorporating bitcoins is extremely practical on the website administrator’s side. The cryptocurrency negates credit card fraud and chargebacks, offers them fast transactions, allows them to let users sign up instantly, and can even offer them a more liquid betting pool. Nitrogen Sports claims that using bitcoins allows them to offer more content, “From major sports and leagues down to cricket and eSports.”

SatoshiDice and the hundreds gaming sites using cryptocurrencies that followed offered something even more important to some, privacy. With no need for a credit card nor the identifying information attached to them, gamblers could could start using services that were illegal in their local jurisdictions. “Bitcoin is the real deal and it is fantastic for us online gamblers,” explains GoodSportsBooks.com. “Hardly was a better match made for US based gamblers than bitcoin.”

“While all sites that process payments can benefit from little or no fees, the fact that Bitcoin is off limits from the courtrooms across the world is what make them so attractive to online sports bettors and online bookmakers.”

– SportsBettingOnline

The entire gambling industry is highly regulated in the US. All but four states have made it illegal to gamble online in any way. Even in those four states, federal laws prohibit where people can bet, only allowing the fully-licensed and identity-recording destinations in approved countries.

Sportsbook betting, where people wager on the outcome of a sporting event, is not quite as illegal, and election outcome betting falls under the same rules. “As long as a sportsbook is licensed and regulated by a jurisdiction that has legalized online sports betting,” the administrator of LegalBettingOnline claims, “Then they are able to legitimately offer their services to anyone they want, including the United States.”

BitBet’s administrator said they had over 24 election related contracts placed on bitbet, some of which are still open at this time. Further, the bulk of the earnings for the presidential election outcome betting happened within only three betting contracts.

“A total of 466 individual bets were placed in these contracts, for a total sum of 268.50691429 BTC or about USD 191’000 (at current exchange rate).”

Virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to consumer protections. The information does not constitute investment advice or an offer to invest.